“If we really want to amplify the future of print, we should not leave any stone unturned.” That was my concluding statement in a lengthy interview with Industry Intelligence Inc., for its Executive Perspective newsletter, I answered a host of questions regarding the future of print, the web, the Magazine Innovation Center and the magazine industry as whole. Industry Intelligence Inc. mission, in the words of its CEO Rami Ghandour, is “To do anything in life successfully, you need the right information at your fingertips. Our cross-enterprise system ensures that all types of information users, in every position in a business, have information they need, when they need it, and how they need it.”
What follows are excerpts of the Q and A with me in the May 2009 issue of Industry Intelligence Executive Perspective:
Industry Intelligence: With some newspapers either shifting online or completely closing, do you see a similar fate befalling the magazine industry?
Samir Husni: I gave a speech maybe three years ago, and the very first slide I showed was: Newspapers in America aren’t dying; they’re committing suicide. And magazines are starting to do the same thing. It’s what I call the shovel policy— everything I have, I give it to you for free on the Web site and charge you for print. I have to be stupid to continue buying your print product, so we have nobody to blame but ourselves when we offer this great content that we create for free. I think we’ve made two major mistakes. We did not think digital, we were thinking print on the Web, so our industry did not look at the Web and say, “What are the strengths of pixels on a screen that I cannot have in print?” All we tried to do was imitate this on the screen. Then we decided it costs nothing to start a Web site compared to print. If somebody comes to me and says. “I want to start a new magazine,” one of the first things I ask for is, “Show me the business plan, your entry and exit strategy, the plan for the content, the budget.” When someone wants to start a Web site, they sit down on their computer and create a Web site. But we didn’t have a business strategy that says: I’m in the business to make money, and if
I’m going to create great content, somebody has to pay the price.
IndustryIntel: What would you say about the magazines that have closed or shifted completely online?
SH: Whether it’s Teen People, CosmoGirl, Elle Girl, all these magazines that they killed in the last few years, they said we’re going to be on the Web now. Where are they? The Web has been the best excuse for someone to kill a magazine that had no audience or was just given away. When they folded Blender—what did they say? We’re going to be on the Internet only. Give it six months … if you are a print product, you are not going to survive on the Web. It should be a crime when you have a magazine like Hallmark that had doubled its circulation in one year, from 400,000 to 800,000, and had increased its ad pages 35% from last year to this year for the company to say, “We looked at the future, and the future does not look good, so we’re not going to continue publishing.” For you not to be able to continue publishing a magazine with 800,000 subscribers—there’s something wrong with that picture, and it’s not the ink on paper, it’s the publishing model.
IndustryIntel: Do you think it was premature for some of these magazines to close?
SH: It’s not only premature, it’s also the publishing model [that says], I’m going to make all my money from advertising, put all my eggs in one basket and then saying, the advertising is going to dry up and I’m not making any money from circulation. This model worked so well for us since World War II until September 2008 when the economy busted.
The majority of our revenue had come from advertising—80%, 90%—so we ended up being in the business of counting customers and taking that number and giving it to the advertisers. So what I’m saying is we have to stop and start finding customers who should be willing and able to pay the high price of the product. Look at The Economist—it’s a news weekly like Time, like Newsweek. Their circulation is up, their advertising is up, and people pay $129 to subscribe to the magazine.
IndustryIntel: Aren’t publishers worried that people won’t pay a premium for a print magazine, especially with competing mediums like TV and the Internet?
SH: Look at the book industry. Book sales were up in Europe last year—book sales in the first two months were up in Germany 2.3%, up in France 2.4%. We were down in America 1% mainly because in ‘07, we had this giant book called Harry Potter that sold millions. So you give me something relevant, I will pick it up. If you tell me, here is this book that you can pay $29.95 or you can go download this on your computer for free … it’s just pure common sense. The Internet companies make you feel that you’re getting all this free stuff, but you’re actually paying a price of connectivity. The average household pays $30 (a month) just to be connected to the Internet on a daily basis. But you don’t think about the monthly fee. You don’t think I’ll multiply that $30 times 12—do you know how many magazines and newspapers you can get for $30 a month? And then the publishing industry came and told those utility companies, “You want to fill in that space, let me give you stuff for free and you collect the money.” It’s like printing the newspapers and giving it to the truck drivers and telling the drivers to go ahead and keep the money.
IndustryIntel: Can the U.S. market sustain 7,000 consumer magazines?
SH: Those 7,000 are in a constant state of change. Last year, we had 715 new titles come into the marketplace in 2008. Probably half of them will die before 2009 is over, but another 700 or 800 will come this year. It’s a cycle. It keeps on coming and going, and that’s nothing new. It’s been like this since 1741 before radio, before television, before the Internet.
IndustryIntel: But there is evidence that we’re entering unprecedented times in terms of closing print newspapers and other publications.
SH: I gave an example yesterday to a group of journalism students in Jackson, Missssippi. I said, “Imagine The New York Times or USA Today or any major metropolitan papers as a nice mansion and then somebody in that neighborhood decided to build a swimming pool, and of course, the word spread. Everybody wants to build a swimming pool, so everybody starts digging. Everybody hires the best contractors to build the most amazing swimming pool. They put in the diving board, and they heard someone say jump and they jumped. Oops, we forgot to fill the swimming pool with water.” That’s exactly what we did with the Internet. We went in with no business plan. We went in with no thinking. We went in because everyone else was going in and we gave away all of our content. And now we are complaining why nobody is buying our newspapers, why circulation is down.
IndustryIntel: Still, isn’t it a terrible time to start a magazine right now?
SH: It’s the best time. When the economy is bad, when everybody is shrinking, when the big media companies are at a standstill, that’s the best time to start a new magazine because it’s going to take one to two years for that magazine to evolve and establish itself. Then you hope in two years, the economy will pick up and you’re ready for that marketplace. Historically speaking, some of the best magazines in this country were started in the worst of times. Fortune started in the midst of the Depression in 1930; Reader’s Digest and Time Magazine in the ‘20s; Esquire and BusinessWeek in the ‘30s during the war.
IndustryIntel: Why did you create the magazine think tank?
SH: One, I can’t believe an industry as big as we are in this country has lost our minds and decided to commit mass suicide. The minute I heard about Hallmark … I used them as an example for the launch of a new magazine. I was speaking at the same press conference with the minister of media in Belgium, and I gave Hallmark as an example of a success story. Two weeks ago, they sent me an e-mail saying they doubled their circulation and their ad pages, and then I come back from Belgium and I get this e-mail that they’re killing the magazine. I said, there’s something crazy about this industry.
IndustryIntel: Was the closure of Hallmark Magazine the first spark for this idea?
SH: I had the idea a long time ago, but that was like, “This is it, I have to do it.” I don’t want to be chair of the [journalism] department anymore. I just want to teach and I want to do this. I made my announcement and my note to my boss and said I’m stepping down in June and I’m going to raise some money for the center. I hope I can raise $1 million. We’ll have a board of advisers, a board of directors. I have three CEOs from printing companies who are very interested in taking part. I’m not going to say no to anybody who’s willing to come here, sit down, and think for a day or two on how we can innovate our business. We’ll have very specific topics, whether it’s distribution, single copy sales, printing, innovations in printing … we’ll have people from the tech industry, and we need to get their ideas. If we really want to amplify the future of print, we should not leave any stone unturned.
SS: We consider ourselves recession-resilient. That’s the word we classify it as – recession-resilient. We believe that there is something going on that is wrong with the economy, but, at the end of the day, it impacts someone like Tiger Woods, Kobe Bryant, or Madonna differently. Yesterday Madonna closed on a $40 million home. The very, very affluent, upper one percent of people we’ve always wanted to reach, still have money. They’re still going to buy nice cars. They’re still going to buy nice watches. They’re still going to buy these types of things. I personally believe that, because of this crazy economy, luxury is going to actually become more of what real luxury is. I was with one of the owners of Mercedes, and he was explaining that 40 percent of leases for the C-Series ended in repossession while the more-expensive S-Series only had eight percent repossessed. We’ve always hit our niche and that’s all. We’ve continued to hit our niche. Our niche is simple. In each market, we mail to homes with incomes in excess of $5 million. We hit the private fliers on over 10,000 private jet flights per month. We are in high-end hotels, high-end boutiques, and retail traffic stores. We feel that if we hit those three areas, then we’ve hit what we [call the] money in motion. Our strategy is not trying to hit someone who lived in a $6 million home three years ago, lost his business, and now he’s out—our advertisers don’t want to hit that guy. Our advertisers want to hit the guy that is living in a $6 million home now. We were able to hit him. Launching in San Francisco wasn’t easy at all. It was very hard and very costly, but, in a short period of time, we’ve built a brand with recognition. 
SS: To be honest with you, this economy was great in building our character. The last six or seven months it’s been hard. A lot of our competitors that were 800-pound gorillas and had a lot of money are now struggling or out of business. That is interesting, because six months ago, when I was speaking to advertisers, 100 magazines had classified themselves as luxury brands. Everyone was pitching to advertisers a lot of stuff that I felt was not possible. I used to tell that to advertisers. Now, those companies that claimed they were doing all these great things are out of business, because they weren’t doing those things. And I think given our brand more credibility. In this tough time, we can make it. Today my partner in the magazine secured a very large deal, a monumental deal for my magazine. We signed up to be guaranteed on 10,000 private jet flights a month in 13 major cities around the world. Whether you like it or not, someone that has the money to spend $75,000 to fly one way from L.A. to New York has to have money to buy watches, cars and so forth. And some of our advertisers, Rolls Royce, Cartier and East Coast Jewelers, are still getting amazing results. We just had a client who had an $8.5 million piece of property in Miami put an ad in my magazine. A gentleman on a Net Jet flight saw the magazine, loved the property, bought it sight unseen and paid 8.5 million dollars cash for the property, just through an advertisement in my magazine. This was all because the guy picked our magazine. He was from London. He had just been in Palm Beach on a business trip and wanted to buy that island because it was about 45 minutes away from Miami. I believe print works. I believe now, just like in all businesses, the best are going to survive and a lot will not, but print is by no means dead.
SS: That’s a very good question. I moved back to Miami to be with my ex-girlfriend. I wanted to get involved in real estate, but I didn’t want to actually sell real estate. I decided to launch a real estate magazine, that would promote listings over $2 million in Miami. I was a big fan of Ocean Drive magazine, the major player in Miami, but a lot of people that I knew weren’t really Ocean Drive readers. I believe that Ocean Drive and my magazine can complement each other. A lot of people when they launch magazines will fight and compete with the big guys. We always complemented them and said, “You should buy ads and read both my magazine and Ocean Drive.” We tried not to copy and do what everyone else does. We tried to build our own niche and brand. A lot of people argued with us and a lot of people thought we were crazy when we launched the magazine. We wouldn’t accept ads that we felt didn’t merit the attention of our readers. If you go look at most of the ads, they’re all name brands. We turn down at least 10 percent of the ads every month if we don’t feel they meet the criteria of our readers. It’s almost like a very high-end nightclub, where they don’t let a lot of people in, but the people they do let in are the quality names. I think that’s how we kind of built our brand. I saw a void in Miami, and I started the magazine and then I got involved with my partner, Kamal Hotchandani. He was able to take Haute Living to the next level. We then decided to build the publication in Miami for the next year, and then launch in New York. After success with New York, we launch Los Angeles, and then San Francisco this year. This has been a thought out process, for the past four years. 
SS: Niche Media is a fine organization. I’m a huge fan of Jason Binn and Jerry Powers. I think Jason Binn and Jerry Powers are the godfathers of luxury magazines. What they accomplished is amazing. Jason built his niche, and I think his brand is going to continue to build and go into cities. If I talked to any young publisher, I would tell them, the only way you’re going to make it happen is if you’re selling, building the edit, and distributing. The only reason Kamal and I built our brand is because we were the ones that got the amazing editorial content, that gave us credibility. You can’t buy the story. What people think is that they can get a million dollars, hire a big editor, hire a big sales guy and build a brand. You can’t. If I had to give advice to anybody, the advice is look at how Jerry Powers and Jason Binn build their business. They build it from scratch. When they launched Ocean Drive, they would put blood and sweat. They built everything on their own. I think anyone who wants to make it in publishing should do it on their own. You have to put blood and sweat into it, and you can’t hire somebody to make it successful. I believe if someone has a passion, they can make it happen. I believe a magazine is like a restaurant. Nine out of ten restaurants close within the year. The owner is what makes a restaurant successful. That’s my humble opinion. We’ve done well, and we’ve never tried to buy people to build it. 
Mr. Magazine 